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Factors Responsible For the Emergence of the Demand for NIEO

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Factors responsible for the emergence of the demand for NIEO:

(1) The big gap between the Developed and Developing countries:

A big economic gap exists between the developed and the lowly developed countries. The former with about 20% of world population, control more than 80% of world income and wealth. The latter has to satisfy the needs of about 80% of world population with the help of less than 20% of resources. The per capita income of the two dozen industrialized countries is between $ 3,000 to $ 6,000, where as that of the developing countries is about $100 to $300.

This wide gap between the North and the South seriously limits the scope of economic relations and trade between them. The affluence of the developed compared with the poverty, scarcity and under-development of the developing world makes the existing international system unequal and imbalanced.

(2) Continuously Increasing Gap:

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The existing big economic and development gap between the North and the South has been increasing at an alarming rate. The developed are becoming richer and the developing are becoming poorer, By virtue of being technologically advanced and industrially developed, the countries of the North are strengthening their control over international trade and income. Both UNCTAD and WTO have virtually failed to prevent this widening gap between the rich and the poor.

(3) Global Interdependence but continued low role of the Developing Countries:

Despite the big gap that exists between the developed and the developing countries, the global interdependence has increased in our times. Both the developed and the developing countries today find themselves increasingly dependent upon each other. However, this global interdependence continues to be exploited by the former for strengthening their economic positions. The hope that the developed countries would come forth with international actions augmenting the transfer of resources and liberalisation of trade, has proved to be wrong.

In actual practice the developed countries have failed to appreciate properly the global interdependence and have continued to pursue their desired objectives in international trade and economy without much regard to the perceptions and needs of the developing countries. This has been a source of grave dissatisfaction for the developing countries.

(4) Economic Neo-Colonialism:

Despite the sovereign equality of all the members of international community, the developing countries find themselves living in an era of neo­colonialism in which the developed countries continue to control their economies and policies. The dawn of independence and the resulting sovereign status has made them free only politically, economically and in actual practice they continue to be dependent upon the developed countries. Being poor and under-developed they find themselves helplessly dependent upon the developed states for securing foreign aid.

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They are very sore at the situation because they feel that their present position has been the result of the exploitation they had suffered in the past and are still suffering at the hands of the developed countries, most of which happen to be the former imperial masters. Developed countries continue to exercise a neo-colonial control over the economies and policies of the Developing Countries. The attempts of the latter to get rid of neo-colonialism have found manifestation in their demand for a new international economic order.

(5) Excessive Exploitation of World Income and Resources by the Developed Countries:

The continued heavy exploitation of world resources and income by the developed countries has given strength to the demand for NIEO. Under multifarious disguises, the rich countries have been successful in maintaining the appropriation of world resources to the detriment of poor and weak countries. Being technologically and industrially advanced and economically affluent, the developed countries continue to have a virtual control over the raw material markets, what practically amounts to a monopoly over manufactured products and capital equipment.

They have been able to proceed at will in fixing the prices of the raw materials that they take from the developing countries. Consequently, they are in a position to drain the resources and incomes of the Third World, and to put unhealthy pressure on the poor countries. This has been a source of much disappointment for the developing countries. They want to end this domination of the developed countries by securing a fairer and just new international economic order.

(6) The role of the Multinational Corporations as agents of Neo-colonialism:

Through a large and extensive network of transnational/ multinational corporations, the developed countries have been exercising an unhealthy and undesirable control over the economies and policies of the developing countries. Most of the MNCs are owned by the people of the developed countries and these function as their extra-governmental arms for extending their control over markets, economies and policies of the developing countries.

A large number of industries in the developing countries are owned by these MNCs. These have created several barriers aimed at checking “access to markets” and “access to advanced technology” efforts of the developing countries. These corporations have the ability to check the rate of economic growth and development and to mould the way of industrial and economic development of the under-developed countries in a way as is deemed ideal to the interests of the MNCs.

The barriers to entry created by the MNCs can hardly be countered by the developing countries through any negotiations. Here the developing countries are most vulnerable. The MNCs have a formidable control over the international trade and these have affected deep penetrations into the economies of the developing countries. The developing countries are sick of the situation and they advocate the need to check the MNC menace in international economic relations.

(7) The inadequacy of WTO:

Even the new GATT—the WTO has failed to satisfy the aspirations and needs of the developing countries. The attempts on the part of the developed countries to incorporate a ‘social clause’ have further been a source of concern for the developing countries. Such attempts are viewed by the Third World as attempts of the developed world at strengthening its neo-colonial control over it. The failure of the WTO to take note of the need for a North-South dialogue over NIEO has again been a source of strain on the relations between the developed and the developing countries.

(8) The Need to protect the Rights and Interests of the Third World countries in the era of Globalisation and WTO:

The dawn of the era of globalisation and WTO regime has given rise to the new need for securing the rights and interests of the developing countries against the attempts of the developed countries to hijack WTO and to establish their hegemony in the grab of globalisation. All these factors have combined to make the Third World countries rally around the demand for NIEO.